Calculate the resulting cash flow and state the nature of cash flow from the following information: Acquired machinery for ₹ 3,50,000 by issuing cheque.
Calculate the resulting cash flow and state the nature of cash flow from the following information: Acquired machinery for ₹ 3,50,000 by issuing cheque.
Solution
✅ Correct Option: 1
To determine the cash flow from acquiring machinery, we look at the transaction details. The machinery was purchased for ₹ 3,50,000, and payment was made by issuing a cheque.
This means cash was paid out, resulting in a cash outflow.
Since the purchase of machinery is related to long-term assets, it falls under investing activities.
Therefore, the cash flow is:
Investing activity and outflow ₹ 3,50,000
The correct answer is Option 1.
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